The Four Corners of Project Risk Management

The ability to see into the future hasn’t quite reached the everyday abilities of your average project manager. If it was the case, project risk management might be made redundant. But for now, risk management remains one of the important pillars when it comes to managing projects successfully.

Successful risk management involves the controlling of future events within a project. This is, of course, difficult when variables are likely to change during the lifecycle of each task. Changing variables are just part of the reality of project management and, likewise, the risk involved is impossible to reduce in its entirety. Our post will detail the four corners of risk management and look at them in terms of both resource management and project portfolio management (PPM) and how you can take steps to control risk as much as possible.

What is project risk management?

Risk management is the process of responding to risk factors throughout a project in a way that prioritizes project objectives. It’s how your project management office (PMO) or project manager attempts to control possible future events.

The main facets of risk management involve:

identifying potential risks

analyzing and reducing risks

responding to risks in a way that is effective and efficient

allowing for better decision making regarding project risk

Risks come from many different sources, some we can help and others we can’t influence. Sources can be internal project risks, for example: having too many projects running at once or senior management not recognizing certain activities as a project. Or they can be external risks, which are often more unpredictable such as natural disasters, unforeseen changes in government policy or regulations. And then there are external risks that are more predictable like inflation or market fluctuation.

No matter how well prepared and confident you are that your project will go off without a hitch, there’s always a chance that something may go wrong. With that in mind, here are four ways to manage risk in your organization’s projects:

1. Acceptance

Accepting the risk means that you note a risk but don’t take any action. This is about accepting that something might happen and that you will only deal with it if/when it does. Normally reserved for smaller risks, this is a good strategy if the impact of the risk won’t have a huge impact on your project success. If the price and time of putting together a strategy or solution is more than the price of the problem itself, then it makes more sense to do nothing.

2. Avoidance

What if the risk has the potential to have a huge impact on the outcome of your project? In that case you may want to consider changing the direction of your project to avoid the risk entirely. For example, you wouldn’t plan a training course for your sales team during your busiest sales month of the year, even if that made a great lot of sense earlier in the project planning. You would avoid the risk of not making sales targets by ensuring all your sales team were fully available to close as many deals that month as possible.

3. Transference

This is when you move the potential risk of a project to another area/department or third party. Obviously, this is more common in bigger projects when there are several parties involved. For example, if you have a third-party contractor involved in a building project taking care of the logistics, you might transfer the risk of errors in the logistics to that third party.

4. Mitigation

Mitigation is all about limiting the impact of a risk, so that if it does occur it’s simpler to fix. For example, making sure your engineers have access to mobile devices when in the field will reduce the risk of communication breakdown. Mitigation is a common risk management technique and should be one of the first considerations of a project manager.

Sense the risk before it happens

Key to deciding which risk management technique to use is having an optimal overview of your projects, resources and the risks you face. That’s why you need a solution that will enable you to see real-time project data so you can make better, more informed decisions.

Modeling features and ‘what-if’ functionality in Tempus Resource give you a better overview of your projects. This is especially true when it comes to risk management, letting you view the perceived impact of project and resource changes ahead of time in a hypothetical scenario. Your project manager can create a model where they can test, in real-time, the effects of changing or modifying their projects, to help them decide on what risk management corner to take. They can see how a project would change if they decided to avoid a risk rather than accept it, etc. And they can see this without committing any amount of time or money. Now that’s as close to being able to see into the future as we’re likely to get.

Tempus Resource from ProSymmetry is the lightweight PPM tool that packs a heavyweight punch. To find out more about how this solution can help accelerate your projects, get in contact with us today.